Tesla has proposed a large new $1 trillion compensation package deal for its CEO Elon Musk, and most of the benchmarks he must hit are merely watered-down variations of guarantees he’s spent years making in regards to the firm.
That’s not the image Tesla’s board of administrators paints within the firm’s annual proxy assertion, the place they revealed the proposed pay package deal. As a substitute, the board focuses on the way it plans to create “the most valuable company in history.”
To make sure, if Tesla accomplishes all that it goals for with this deal, it should seem like a a lot totally different firm on the finish of the 10-year interval it covers. That doesn’t change the truth that the milestones the corporate is asking Musk to intention for are much less formidable than his personal previously-stated targets.
Whereas the unprecedented pay package deal nonetheless must be accredited by shareholders at a gathering in November, it’s straightforward to see the corporate’s fervent fan base voting “yes.” Earlier votes on Musk’s compensation have been overwhelmingly accredited by Tesla’s shareholders.
With that in thoughts, let’s check out what Musk wants to perform as a way to obtain the complete payout.
20 million automobiles … whole
Musk spent years claiming Tesla would be capable of make 20 million electrical autos per yr by 2030. This was again when he and his firm had been nonetheless promising to develop at a price of fifty% annually.
However Tesla walked away from these guarantees as gross sales development stalled, after which reversed in 2024. The corporate then pulled the 20-million-per-year aim from its impression report final yr, and stopped constructing a deliberate manufacturing unit in Mexico that would have elevated manufacturing.
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Now, the primary “product goal” that Tesla’s board of administrators laid out for Musk to attain on his path to changing into a trillionaire is to ship 20 million autos whole. Tesla has already bought eight million automobiles so far, and even with gross sales slumping, is transferring simply shy of two million per yr.
With the brand new pay package deal being laid out over a 10-year interval, meaning the goal has gone from 20 million EVs per yr by 2030 to only 20 million whole by 2035.
A million robotaxis*
One among Musk’s most notorious and outrageous guarantees about Tesla got here in 2019, when he claimed that the corporate would have a million robotaxis on the street in 2020. It’s now 2025, and Tesla has solely simply begun to trial a robotaxi service in Austin, Texas that has, at most, round 20 or 30 automobiles with security drivers on board.
To entry his full proposed pay package deal, Tesla is asking Musk to assist the corporate understand an altered model of that promise, as one other product aim listed is to have “1 million Robotaxis in Commercial Operation.”
It’s a aim with caveats. The fantastic print exhibits that Tesla is simply requiring there to be a “daily average aggregate” of 1 million robotaxis “commercially operated by or on behalf of [Tesla] over a consecutive three-month period, as part of a transportation service.”
Tesla goes on to outline “Robotaxi” as any Tesla automobile, together with however not restricted to the purpose-built “Cybercab” it’s creating, that’s utilizing the corporate’s Full Self-Driving software program to supply rides to individuals.
This contains customer-owned autos, which is one other factor Musk has lengthy promised however by no means delivered. He’s spent years claiming that Tesla might flip a digital change and switch current autos into fully-autonomous ones, and that homeowners might add and subtract these autos to a bigger robotaxi fleet at will.
However Musk has since stated most of the Teslas at the moment on the street don’t have the required {hardware} for the previous to occur, and the corporate has but to show the latter. Regardless, Musk now has an excellent looser timeline to attempt to make each issues occur.
A million “bots”?
Musk sees Tesla’s future being all in regards to the humanoid robotic that it’s creating, known as Optimus. Simply this week he claimed it might make up as a lot as 80% of the corporate’s future income.
As he grew to become more and more targeted on Optimus, Musk made some fairly wild guarantees about what that future would seem like. One among his core claims was that Tesla can be making a million Optimus bots per yr by as early as 2029.
And but, Tesla’s board is simply asking Musk to ship a million “bots” whole as a part of this proposed compensation plan. Tesla additionally defines “bots” as “any robot or other physical product with mobility using artificial intelligence manufactured by or on behalf of the Company” — although the corporate’s autos don’t rely.
The administrators appear to agree that Optimus has “the potential to be Tesla’s bestselling product,” they usually say it reperesents “the clearest example of how Tesla has the ability to make autonomy benefit all of humanity.”
However the board additionally notes that “commercialization plans” for Optimus are “still in development,” and Musk now has till 2035 to succeed in the a million mark.
All the things else
The fourth and ultimate product aim Musk has to attain is to notch 10 million energetic subscriptions to Tesla’s Full Self-Driving (FSD) software program. It’s arguably probably the most formidable product aim. The corporate doesn’t say what number of present homeowners have paid for FSD, although executives have just lately stated the adoption price is within the “teens.” At finest, meaning anyplace from a couple of hundred thousand to the low tens of millions of Tesla autos have the software program put in.
All the things else Tesla’s board is asking of Musk is tied to cash. In the end, Musk wants to assist Tesla attain an $8.5 trillion valuation as a way to unlock the complete worth of the compensation package deal and turn into a trillionaire himself.
Musk already had grand designs to perform one thing related. He has usually claimed that Tesla might at some point turn into extra precious than Apple and Saudi Aramco mixed. At their present valuations, these two firms are collectively price round $5.5 trillion. However earlier this yr, the CEO claimed Tesla could possibly be price greater than the subsequent 5 most-valuable firms mixed — which on the time meant he was aiming nearer to the $15 trillion mark.
Together with the aim of blowing up Tesla’s valuation, Musk is being requested to extend the corporate’s earnings to, primarily, $400 billion per yr — an infinite determine in comparison with final yr’s earnings of round $17 billion.
Lastly, Tesla’s board has requested for 2 notable assurances from Musk as a way to unlock the complete worth of the compensation package deal. One is that he should work with the corporate to develop a plan for the way he can be succeeded as CEO of Tesla (and the plan primarily locks him to the corporate for at the very least 7.5 years).
The opposite, buried in a footnote, is that Tesla acquired “assurances that Musk’s involvement with the political sphere would wind down in a timely manner.”
Taken as a complete, it’s a posh settlement with plenty of really pie-in-the-sky concepts about the place Tesla might go beneath Musk’s management over the following decade. The identical was stated in regards to the earlier compensation deal that Tesla struck with Musk again in 2018, and but the corporate hit all of these seemingly-outrageous targets. (Musk’s award was in the end dusted by Delaware’s Chancery Court docket.)
Nonetheless, it’s laborious to not discover simply how a lot these new targets seem to return from the corporate attempting to tug its CEO’s guarantees again all the way down to Earth.
